Supporting the hotel sector with the risk and insurance implications around quarantine and asylum occupancy
Contracts have been broad in scope and include key workers, short term housing by local authorities, quarantine accommodation for UK and foreign nationals travelling from ‘Red List’ countries and most recently, asylum seekers and refugees. UK Government mandated lockdowns and the continued travel restrictions have severely impacted trade and therefore the hospitality sector has been nimble in responding to new demands and revenue streams.
These contracts bring new and evolving risks that were not broadly an issue during normal, pre-Covid trading. It’s clear that a number of factors are now impacting hotels in terms of risk. Most significantly, the recent events in Afghanistan have further changed the dynamics. In a matter of weeks, the issue of re-settling large numbers of families seeking asylum, has come to the fore in terms of both urgency and complexity.
The government has responded to the need to accommodate thousands of displaced people within a very short timescale. As a result, hotel owners are having to make difficult and urgent decisions on how they will use their hotel rooms in the weeks and months to come. Providing quarantine hotels and hotels that are equipped to host asylum seekers requires both capital investment and stringent compliance with both local authority guidelines – and it impacts brand standards. The insurance market is wary of the perceived additional risk exposures that such contracts bring. The aim of this article is to explore these exposures and identify where owners, brands and managers may mitigate these risks with the support of their insurer partners.
The challenges of providing accommodation for asylum seekers
The government has agreed to house upwards of 20,000 refugees and local authorities are contacting hotel operators directly to make the request. Hotels are selected on the basis of commercial arrangements used across government. Many hoteliers will be keen to respond to the humanitarian crisis, motivated also by the prospect of filling rooms with certain cashflows that have been empty for many months. However, this option is a very different prospect from housing those following government regulations as they quarantine on their return from Red List countries.
Hoteliers are undoubtedly keen to answer the humanitarian call – and up to 100% occupancy is guaranteed. Should they wish to house asylum seekers, their local authority is able to supply the additional staff, security and meals. But the reality is far from straightforward – and the insurance implications for taking in refugees need to be addressed. Housing vulnerable families uprooted from their war-torn country brings significant hazards. Already traumatised, these families are having to face being cooped up 24 hours a day in a strange country, many of them coping with the additional demands of young children. Their needs are acute and ongoing, requiring access for example, to health and therapeutic support.
Addressing reputational and operational risk
The need for quarantine hotels continues, but it’s impossible to predict for how long. In the current, Covid-restricted circumstances, a quarantine hotel is a good opportunity for an hotel owner, albeit a limited one, so a longer term strategy is sensible. If the pandemic recedes and quarantine regulations are lifted relatively soon, the need for these hotels will recede – and once again, there will be a need to fill hotel rooms to pre-Covid levels.
However, while operating quarantine hotels is by no means straightforward, housing asylum seekers brings a different set of more serious challenges. There are many significant risks and insurers are naturally concerned and cautious. At Lockton, we understand the issues and have supported our clients with the uncertainties they are facing right now. Whatever your challenges, we can help you navigate the rapidly changing landscape, working closely with you to identify the reputational and operational risks, in order to secure the insurance you need.
- Complaints from guests stuck in hotel rooms for long periods. Asylum seekers are likely to be disorientated and have language barriers, along with inevitable concerns and frustrations over their futures that can at times be overwhelming
- Customer service issues at quarantine hotels, exacerbated by the broader, Covid-driven staff and stock shortages, leading to complaints shared on social media highlighting for example, sub-standard nutrition, a lack of fresh air and exercise and “prison like" conditions in spite of costly fees paid by each guest
- Reputational damage for a brand being associated with asylum seekers and the potential for complaints about poor conditions and treatment, insufficient food and medical care
- Hotels being targeted by far-right extremist groups, including protests from anti-immigration groups, requiring action from the police.
- Given recent security concerns with lone woman being approached should this also be noted
- Guests will be unfamiliar with the hotel environment, having landed in a foreign country
- Language barriers make fire and evacuation procedures more challenging
- Damage and increased wear and tear and a lack of care from guests
- Requirement for additional security and customer service staff, against the backdrop of existing staff shortages
- Threat of violence or suicide from those fleeing the turmoil and upheaval in their home country and arriving traumatised, exhausted and disorientated
- The ongoing risk of Covid infection.
Providing the detailed information that insurers need
Naturally, in these unexpected circumstances, insurers are cautious in their approach to covering the new and emerging risks. To secure the appropriate insurance which is available, hotel owners, managers and brands need to consider the many new and evolving risk implications that housing asylum seekers will bring. Our team of experts is ready to work closely with you to identify precisely the cover you need and the steps needed to achieve it.
As a broker, we’re able to draw on our experience to assist with many of these concerns:
- Urgent need for revised dynamic and evolving risk assessments
- Identifying risks and developing control measures – with review on an ongoing basis. For example: management controls including increased security measures, employee training to handle aggression and violence, but balanced with Human Rights requirements and legislation
- Review of incidents / claims as part of the risk identification
- Major incident / police response plans
- Procedures / process for dealing with / evicting problematic residents (and training of staff to handle such situations)
- COVID control measures being a significant part of obligations as part of these contracts
- Ensuring compliance with basic legal requirements and duty of care to / effects on all stakeholders, e.g. home office, asylum seekers, staff, other hotel users and members of the public (especially neighbours) – requiring a difficult balancing act
- Requirement for enhanced security and increased patrolling, 24 hours a day.
Selecting and negotiating with the right insurer
All of these factors constitute a potential significant financial cost to the hotel managers and operators, as they strive to comply with the government guidelines for refugee and quarantine hotels. Some insurers are more accepting of the risk than others – so insurer selection is vital where this is likely to be a longer term strategy.
We understand the challenges and we know what the insurance underwriters are prepared to accept. At Lockton, we can guide you through the steps you need to take to make sure your insurer is comfortable with the risks involved. Crucially, the incumbent broker may not provide the right information at the outset, especially with regard to security. Because of our experience, we can draw on specialist knowledge that the current insurer may not have. For example, it’s vital to choose security firms with extensive experience of these specific issues, who are also multilingual.
Helping you to address the insurer’s concerns
We will provide the insurer with a detailed appraisal of the owner / operator’s actions in addressing their many concerns, so they have the assurance that the risk is being mitigated. For example, we will work with you to set out all of the actions that you are taking to address the key risks. By painting a positive picture of the risk reality – rather than a preconceived fear – whilst providing detailed answers to all of their questions, we can ensure that the insurer will continue to provide full and unaffected cover.
Key steps to achieve the insurance you need
- Start the process early with insurers and treat them as a partner
- Address the urgent issue of asylum seekers
- Provide the right information at the outset, particularly with regard to security
The urgent need to accommodate those fleeing Afghanistan will become even more pressing over the coming weeks. The decision to take in those in such desperate need creates a changed risk profile – for which accurate, comprehensive insurance is fundamental. In these exceptional circumstances, we can help you move fast towards securing the insurance you will need to take on these challenges.
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